Energy Policy

Labour is committed to a
secure, affordable and sustainable energy future. New
Zealanders need modern, reliable sources of energy that will
ensure that our lights will stay on and our businesses keep
working. We want to continue to have energy available at
affordable prices. This is especially important for older
New Zealanders, though all New Zealanders need warm homes in
winter months.

New Zealand is on the cusp of an
opportunity. As climate change and future oil supply
uncertainties start to bite, New Zealand has the opportunity
to create a sustainable energy future.

Labour’s
Achievements

Over the last six years, Labour has created
an environment that will help New Zealand achieve security
of supply, affordability and a sustainable energy future.
During the last two terms in government, Labour has:

-
Adopted a target of a 20% improvement in energy efficiency
by 2012.

- Developed the Sustainable Energy Framework so
that New Zealand can start thinking about our options for
the future.

- Created the Electricity Commission to better
manage security of supply, and to ensure the lights stay on
even in dry years.

- Ensured that sufficient additional
electricity generation has come on stream to keep up with
increasing demand, without placing further pressure on
security of supply.

- Put a strong focus on getting the
best deal for consumers, so people can afford to keep their
homes warm.

- Made it compulsory for electricity retailers
to offer a tariff with a daily charge of 30 cents per day,
so that those who use modest amounts of power don’t have to
pay a fortune just to keep electricity connected.

-
Established the Energy Efficiency and Conservation Authority
(EECA) as a statutory authority and dramatically increased
funding for energy efficiency improvements at home and
work.

- Successfully renegotiated the Maui gas contract to
optimise the remaining supply from that field.

- Changed
the oil and gas prospecting rules, making New Zealand an
even more attractive place for prospecting, and increased
the number of licences issued, to help oil and gas
security.

- Begun to create a framework for transmission
upgrades that will ensure we can continue to get electricity
from where it is generated to where it is needed.

-
Introduced price regulation for monopoly lines companies,
which is administered by the Commerce Commission.

Labour’s Priorities

ELECTRICITY

Following the
establishment of the Electricity Commission, New Zealand’s
electricity sector has moved away from the vagaries of the
free market of the 1990s. This new ‘managed market’ future
will protect security to the standards expected and needed
in a first world nation like our own. Secure Supply During
our next term in government, Labour will:

- Use the
Electricity Commission to monitor supply and demand of
electricity and ensure that there is enough backup
generation even in dry years.

- Continue the focus on
cost-effective renewable sources of energy supply, to
augment the 517 MW of renewable energy, including the
Southern Hemisphere’s largest wind farm, that have come on
stream since Labour came to power.

- Provide investment
certainty by introducing a carbon tax of $15 per tonne of
CO2 from April 2007. The carbon tax sets a transparent
framework for how environmental costs are to be factored
into project economics.

- Develop a National Policy
Statement to clarify and standardise the rules for
transmission investment.

- Retain state ownership of the
energy State Owned Enterprises, including the national grid
company, Transpower, and the three major electricity
generators, Genesis, Meridian, and Mighty River Power.
Affordable Electricity During our next term in government,
Labour will:

- Continue to require that retailers offer a
low fixed charge tariff option to domestic consumers who use
less than 8,000 kWh/year, ensuring that they pay less on the
low fixed charge than any corresponding tariff option.

-
Ensure that the terms and conditions of contracts between
domestic consumers and electricity retailers reflect the
reasonable expectations of consumers, including:

-
Transparency of charge components

- Information on the
frequency of billing

- Arrangements for informing
consumers of planned outages

- Company-specific
arrangements for dispute resolution

- Arrangements for the
benefit of low-income domestic consumers

- Ensure that
arrangements are put in place to protect consumers who may
have difficulty paying their bills on time, including
avoiding the cost of frequent connection and disconnection,
providing access to budgeting assistance if required, and
the offer of pre-payment options.

- Put downward pressure
on prices by continuing to improve competition in the
wholesale electricity market.

- Monitor the effectiveness
of Commerce Commission’s price control regime on lines
companies.

- Promote initiatives through the Energy
Efficiency and Conservation Authority (ECCA) such as home
retrofits and business energy audits – to make heating a
home or running a business more affordable.

- Ensure that
consumers have access to a free, independent system for
resolving complaints about electricity distributors
(including Transpower) and electricity retailers.

Sustainable Future

Over the next 10-20 years, most new
electricity generation will be renewable. However, some
thermal power will be needed in the New Zealand system for
the foreseeable future, to allow for the vagaries of New
Zealand weather that affect both hydro and wind generation.
Meanwhile, research is needed into other options. During our
next term in government, Labour will:

- Work towards
raising the proportion of electricity generated from
renewable sources to 80% by 2020, with 20% from new
renewable sources such as wind, solar and fuel cells.

-
Increase support for renewable fuel and electricity, and by
encourage electricity generators to pursue environmentally
sustainable electricity generation in preference to
environmentally harmful generation (for example through the
carbon tax).

- Explore options for optimising new sources
of power, such as wind, wave and biomass, and the
transmission issues associated with such an approach.

-
Research the possibility of New Zealand meeting all future
growth in demand from renewable energy sources, including
evaluating the costs, economic structures and system
implications of a focus on renewables.

Saving
energy also saves money - affordability and efficiency go
hand in hand. Labour will help New Zealand reach the target
of 20% improvement in energy efficiency by 2012, and
therefore help save consumers money as well.

During our
next term in government, Labour will:

- Use the mandate of
the Electricity Commission to help progress the 20%
improvement in energy efficiency by 2012 commitment.

-
Improve New Zealand’s uptake of energy efficient
technologies and systems by increasing funding for EECA and
projects that increase our energy efficiency through grants,
carbon credits and loans. For example, this could
include:

- Additional funding for EECA’s loans scheme that
helps fund the installation of solar water heaters in
homes.

- Further support for EECA’s project to retrofit
insulation into low-income homes, so that all houses are
fitted by 2015.

- Develop and implement the Ministry for
the Environment's Warm Homes Project, which has combined
environment/health/energy efficiency gains – getting
low-income homes away from energy sources such as coal
fires.

- As part of the Warm Homes Project, investigate
the possibility of a subsidy scheme to assist homeowners to
convert to cleaner sources of home heating and implement
energy efficiency measures.

- Make building and home
energy efficiency a major consideration for buyers by
introducing a Home Energy Rating Scheme.

- Make future
buildings healthier, more comfortable, and cheaper to run
by:

- Improving building standards to raise insulation
levels.

- Simplifying sustainable building.

- Requiring
consideration of passive solar design and solar hot water
systems, or incorporation of connections for these for
future installation. These distributed systems, along with
efficient low-emission fireplaces, reduce electricity demand
and will be encouraged.

- Continue improving efficiency of
large and small appliances by increasing minimum energy
performance standards (MEPS) and introducing them for new
classes of appliances such as lighting, particularly for
appliances primarily used during peak load times.

-
Ensure it is possible for small-scale renewable energy
projects to fairly connect to the national grid.

OIL

Although the date at which world oil production will peak
and then begin to decline is not certain, the effects of
this decline on our economy and society are so significant
that we must be proactive by reducing our dependence on oil,
and by contingency planning in case the decline happens
before we are fully prepared. While renewable electricity
generation capacity grows every year, our transport sector,
which accounts for about half of our total energy use, is
still almost 100% reliant on oil based petrol, diesel and
aviation fuel. Given our small size, remote location and oil
import dependency, New Zealand is particularly vulnerable to
international supply shocks. During our next term in
government, Labour will:

- Set up an interdepartmental
working party to work in conjunction with community groups,
business and other stakeholders to assess the effects of the
peak in world oil production on all aspects of New Zealand
society.

- Prepare plans for mitigating the effects of a
sustained increase in the price of oil over a variety of
timeframes.

- Address issues of security of supply, by
holding tenders for additional oil storage to bring New
Zealand’s stocks up to the required 90 days supply. This
will reduce New Zealand’s vulnerability to short term
international disruptions.

- Continue moves toward a more
sustainable transport system by:

- Facilitating the
introduction of biofuels.

- Encouraging the uptake of
efficient vehicles.

- Introducing stricter border controls
for imported vehicles.

- Introducing vehicle fuel
efficiency labeling.

- Continuing improvements in public
transport and traffic demand management.

- Investigating
congestion pricing.

GAS

During our next term in
government, Labour will:

- Implement the Gas Sector
Industry Governance arrangements to provide the regulatory
framework necessary to protect the interests of both the
people of New Zealand and gas sector participants.

-
Ensure that customer switching protocols are standardised
and upgraded to ensure barriers to customer switching are
minimised.

- Ensure that efficient and effective
arrangements are in place for the proper handling of
consumer complaints, and that model contract terms and
conditions between consumers and retailers are
developed.

- Ensure that an open access regime across
transmission pipelines is established so that gas market
participants can access transmission pipelines on reasonable
terms and conditions.

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